A new Ecosystem Marketplace report set out to determine how carbon offsetting fits into corporate carbon strategies and found that 14% of businesses disclosing climate change information purchased offsets. Among many significant findings, the report dispels the myth that companies buying carbon offsets do so to avoid making climate commitments.

A new Ecosystem Marketplace report set out to determine how carbon offsetting fits into corporate carbon strategies and found that 14% of businesses disclosing climate change information purchased offsets. Among many significant findings, the report dispels the myth that companies buying carbon offsets do so to avoid making climate commitments.

This article was originally posted in the V-Carbon newsletter. Click here to read the original.

March 26 2015 | What do automaker General Motors, bank Barclays, cosmetics company Natura Cosméticos, and retailer Marks & Spencer have in common? They’re all leading voluntary buyers of carbon offsets, investing in emissions reductions projects outside of their immediate operations.

The results dispel the misguided myth that offsetting is a way for companies to dodge climate commitments. In fact, offset buyers tracked by CDP spent $41 billion in 2013 on emissions reductions other than offsetting, undertaking all of these carbon-saving initiatives – from energy efficiency in buildings to employee engagement programs – at a higher rate compared to companies that didn’t purchase offsets. The typical offset buyer slashed almost 17% of their Scope 1 (direct) emissions while non-offset buyers reduced Scope 1 emissions by less than 5% in the same year.

“There’s a common misperception that offsetting is a way for companies to ‘buy their way out of the problem,'” said Allie Goldstein, Senior Carbon Associate at Ecosystem Marketplace and the author of the report. “But when you dig into the CDP data, it’s clear that offset buyers are actually just using more tools at their disposal to reduce emissions, and they’re investing in these activities at a higher rate compared to companies that don’t offset.”

Offset buyers have disproportionately large Scope 3 (indirect) emissions, the report finds, and offset purchases may be a way to address “upstream” supply chain emissions and “downstream” product use emissions that are difficult to get at in other ways. Customers’ use of sold products – encompassing everything from burning gas to operating computers to refrigerating food products to even using inhalers – accounts for more than 70% of Scope 3 emissions, according to CDP disclosures.

To fund emissions reductions projects, many companies – such as Japanese camera-maker Canon – have dedicated budgets for their offset portfolios. Forty-five offset buyers – including Microsoft, The Walt Disney Company, TD Bank, Aviva, and Barclays – have set an internal price on carbon, charging their business divisions according to their respective emissions. Offset buyers are five times as likely as non-offset buyers to use an internal price on carbon to drive emissions reductions within their company.

On average, offset buyers are also more concerned about regulatory and reputational risk. Nedbank, the first carbon neutral bank in Africa and an investor in Africa-based avoided deforestation offsets, reports that “climate change ignorance will translate into reduced shareholder value.”

A similar set of motivations may be driving the hundreds of companies that have committed to eliminate tropical deforestation from their supply chains. Join us this Wednesday, March 25th for the launch of Supply-Change.Org, which documents companies’ public pledges to source palm oil, soy, cattle, and timber & pulp without chopping the world’s remaining rainforests. Supply-Change is convened by Forest Trends, with Ecosystem Marketplace, CDP and WWF as strategic partners. The webinar launch event will include speakers from all three organizations as well as representatives from Marks & Spencer, Calvert Investments, and others.

More news from the voluntary carbon markets is summarized below, so keep reading!

—The Editors

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We’ve now closed data collection for our State of the Voluntary Carbon Markets 2015 report – thanks to the hundreds of organizations that responded to our survey this year! We’re now delving into analysis of the results, looking at the motivations of voluntary buyers; how offset prices varied by project type, location, and standard; and emerging trends among project developers and investors. Interested in supporting this work? Last year’s report has been downloaded 53,000 times and informed consultations with noteworthy private sector stakeholders ranging from IFC to Nestlé regarding the structure of their sustainability policies and offset purchases/investments, as well as governments designing carbon pricing programs – including South Africa, South Korea, and Japan. In addition to logo placement on the cover, we offer Sponsors tailored pre-launch consultations on the findings, as well as other benefits. Check out our SOVCM Sponsorship Prospectus and get in touch with Gloria Gonzalez at ggonzalez@ecosystemmarketplace.com for more details.

How business can tackle deforestation is part of a global series of events combatting deforestation – this stage taking place in Washington, D.C. on April 14th-15th. By bringing together the corporate practitioners and NGOs that make a difference, the conference is designed to discuss the trends, debate the issues, connect the key players and drive change in the deforestation space. Already confirmed to participate are senior executives from the likes of Target, 3M, Greenpeace, Staples, Walmart, McDonald’s, Kimberly Clark, Wilmar, Johnson & Johnson, Dunkin’ Brands and many more. You can see the full details here.

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No Plan B necessary

One of the biggest voluntary buyers of carbon offsets in Ecosystem Marketplace’s new demand-side report, British retailer Marks & Spencer (M&S) has no plans of slowing down. The company’s first sustainability plan – known as Plan A – launched in 2007 and established 100 commitments to achieve in five years, among these a carbon neutrality goal. To meet that goal, M&S first started lowering its own emissions through energy efficiency improvements and renewable energy use and then turned to offsetting. Its partnership with The CarbonNeutral Company and UNICEF on a clean cookstoves program in Bangladesh has had such a positive impact that the company has now joined with the Global Alliance for Clean Cookstoves to promote similar projects. The new Plan A, targeted for 2020, seeks to make M&S the world’s most sustainable retailer.– Read more from Ecosystem Marketplace here

Voluntary Carbon

Coming up roses

A multi-stakeholder collaboration between retail and wholesale firm Coop, South Pole Group and the World Wildlife Fund was able to offset the emissions of all goods that Coop imported by air to Switzerland. The collaboration invested in a project to distribute efficient cook stoves to Maasai villages in Kenya. The villagers represent the majority of employees at Oserian Flower Farm, the Kenyan-based producer of Fair Trade-certified roses. The initiative focused on reducing emissions from cook fires, reducing harmful illnesses, and halved demand for firewood in the area. The project has been validated under Gold Standard’s multi-country improved cookstove program of activities (PoA).

County commissioners in Hillsborough County, Florida discussed the potential for selling carbon offsets generated by restoration activities underway at county conservation lands. Commissioner Al Higginbotham proposed directing the money generated by possible offset sales toward the $2.7 million annual cost of maintaining the county’s 61,500 acres of conservation land. Hillsborough first explored the idea of carbon offsets in 2011, with the study determining that offsets should be generated as part of restoration activities on conservation lands.

The Regional Greenhouse Gas Initiative (RGGI) surged past the $2 billion mark in total revenues generated under the Northeast carbon trading program after RGGI’s first quarterly auction of 2015. The 15.2 million allowances sold for $5.4 per ton of carbon dioxide emitted, which generated over $82 million for clean energy and consumer benefits. But the quarterly auction proceeds were the lowest since late 2012 because RGGI offered fewer allowances as emissions decline across the region. The state of New Jersey is losing out in a big way, according to U.S. Representative Frank Pallone Jr., as Governor Chris Christie’s decision to withdraw from RGGI in 2011 has cost the state an estimated $114 million, with additional projected losses of $387.1 million through 2020.

In California and Québec’s latest joint auction, the US state raised $629.5 million, bringing California’s total revenue from 10 auctions to almost $1.6 billion, while the Canadian province raised $150 million. California’s proceeds from the auction are put into a state account dedicated to funding clean energy programs, including Governor Jerry Brown’s high-speed rail project. About 84 million allowances sold for just over $12 per tonne (tCO2e) in the second auction for the now-linked jurisdictions, which some believe could serve as a template for a global carbon market.

Montreal-based Biothermica Coal Carbon, one of the first developers to receive offsets issued by the California Air Resources Board under the new coal mine methane protocol, sold all 80,766 offsets for Canadian $860,000, or about US $672,934. If you do the math, this results in a price of about $8.3/tCO2e. While this price would be on the high side of the voluntary market, it is nearly $1.4/tCO2e below the current spot market for California carbon offsets. The offsets were generated by the destruction of methane – a greenhouse gas 25 times more potent than CO2 – emitted by the ventilation system of Jim Walter Resources’ underground coal mine located in Alabama.

Duke University’s Nicholas Institute for Environmental Policy Solutions released a new paper suggesting that states adopt “common elements” that would allow them to participate in cross-state carbon trading systems to reduce power-sector emissions from greenhouse gases. The paper suggests states could develop their own targets for emissions reductions, rather than a multi-state shared target, and allow electricity generators to trade compliance permits with generators in other states. Robert Stavins, a Harvard University economist, called the idea “cap-and-trade from the bottom up, rather than the top down.”

The European Parliament’s Environment Committee recently voted to place unallocated carbon allowances into the reserve, which would introduce flexibility into the European Union Emissions Trading System (EU ETS) and help address the projected surplus by 2020 of two billion allowances. Questions remain about the potential for volatility in the market resulting from the release of unallocated allowances from the New Entrants Reserve and from closures of installations that previously held allowances. The International Emissions Trading Association said these excess allowances should be placed directly in the Market Stability reserve.

Delegating far and away

Norway is betting it will be easier to cut carbon emissions abroad than at home, and may pay 1.5 billion euros for emission cuts in European Union (EU) nations, or elsewhere if international climate negotiations fail, through 2030. Norway is not an EU member, but it is the region’s second biggest oil and gas supplier and participates in the EU’s carbon market for certain industries, including oil and gas production. Norway adopted a plan to cut emissions by the equivalent of 40% below 1990 levels by 2030, and the offsets they purchase will be used to meet this goal. This plan may boost EU carbon prices, which have fallen 81% since 2008, and could help reduce the current surplus of offsets in the EU market.

China will launch its first carbon-dedicated trust fund in an attempt to lure investors into fledgling CO2 markets. The trust fund, managed by CMB Sinolink Investment, a subsidiary of China Merchants Bank, reached a total of 50 million yuan in the first 18-month phase, and plans to raise another 300 million yuan this year. “We are targeting secondary trading in both permits and offset credits, and project development in the primary market,” said fund manager Pang Binfeng. Across China, more than 2,000 companies are now obligated to participate in the seven separate CO2 markets.

Eco Business Management has been ordered closed by the High Court in Britain. The firm was ordered to liquidate after investigators found it sold overpriced carbon offsets and falsely claimed that investors would receive returns of up to 82% within six months to two years. The company was found to be related to Eco Asia Carbon Consultancy – a firm identified on the United Kingdom’s Financial Conduct Authorities’ scam warning list. Because the company did not need to prove an identity or address to register, there is little chance of quickly catching the responsible individuals.

Permian Global, Wetlands International, and Silvestrum revised the Verified Carbon Standard’s REDD+ methodology to include projects that address deforestation of tropical peat forests and projects to restore damaged peat lands. The methodology now includes six modules for determination, quantification, and monitoring of the baseline carbon stock changes and project emissions associated with peat land conservation and restoration. Peat forests in Indonesia store, on average, 2,009 tonnes of carbon per hectare.

The proposed “PayC” app is hoping to use crowd funding on Kickstarter to build a pay-as-you-go carbon offsetting platform. The developers will allow users to elect how much time they want to offset and will calculate their total emissions in that time period using rates based on the per capita emissions of their country. The app will allow users the choice to purchase offsets from United Nations’ registered projects, or from emissions trading schemes such as EU ETS.

Based in Washington, D.C., the Senior Communications Associate will support the Communications Manager in strengthening Forest Trends’ overall communications, with a special emphasis on media and social media outreach. S/he will be responsible for promoting Forest Trends’ work to the media and also generally strengthen the organization’s outreach by cultivating and organizing media contacts and lists, assisting with mailings (primarily electronic) and other forms of outreach, coordinating event logistics, supporting the publication and communications production process, and performing other duties as assigned. Successful candidates will have a bachelor’s degree and three to five years of relevant experience.

Based in Washington, D.C., the Research Assistant will be able to commit to 35-40 hours per week to support a range of activities under the Ecosystem Marketplace Carbon Markets Program, including supporting the development of the State of the Forest Carbon/Voluntary Carbon Markets reports. The ideal candidate will have a graduate degree, an interest in conservation finance/payments for ecosystem services and basic knowledge of the carbon markets or another ecosystem service market; excellent writing, verbal communications, research and organizational skills; and excellent working knowledge of Microsoft Excel.

Based in Lagos, Nigeria, the Managing Director will oversee and grow Envirofit’s operations, sales and business development within the West Africa region. Successful candidates will have a bachelor’s degree or master’s of business administration, plus 10 years of experience with a proven track record and expertise in business development, manufacturing, supply chain management, sales, distribution and business growth in Africa.

Based in San Francisco, California, the Senior Program Associate will help build the sustainable finance strategy and execute key priorities under the direction of the Program Director to develop a philanthropic strategy to shift investment away from fossil fuels and into clean energy. Successful candidates will have five to seven years of experience supporting programs, and two to three years of experience in finance or related sector, advanced degree in business, finance, or other relevant field preferred.

Based in San Francisco, California, the Manager will work with senior leadership to design, compile, and maintain an ongoing database of historic, current and future funding for climate change mitigation strategies. Successful candidate will have over three years of experience in an analytical or consulting role, exceptional analytical and programming skills with two to three years of advanced Excel experience. A graduate degree in a field such as business, finance, accounting or information science or equivalent work experience required.– Read more about the position here

Team Leader – Agricultural Waste Management, SNV Vietnam

Based in Hanoi, Vietnam, the Team Leader will support the Low Carbon Agricultural Support Project which is aimed to reduce air, water, and soil pollution with emphasis on treating livestock wastes through use of biogas and bio-slurry processing technologies. The successful candidate will have a relevant university degree in agriculture, management or a relevant discipline and at least 10 years of experience in project implementation management in a developing country.

Partnerships and Communication Director – Nexus-Carbon for Development

Based in Phnom Penh, Cambodia, the Partnerships and Communication Director will develop, manage and maximize the potential of current and new partnerships, in addition to overseeing the development and implementation of the organization’s communication strategy. Successful candidates should have an established network of engaged corporates and understanding of corporate social responsibility.

Ecosystem Marketplace is a project of Forest Trends, a tax-exempt corporation under Section 501(c)3. This newsletter and other dimensions of our voluntary carbon markets program are funded by a series of international development agencies, philanthropic foundations, and private sector organizations. For more information on donating to Ecosystem Marketplace, please contact info@ecosystemmarketplace.com.